Problem 18.36

Segmented Income Statements, Adding and Dropping Product Lines

Dantrell Palmer has just been appointed manager of Kirchner Glass Products Division. He has two years to make the division profitable. If

the division is still showing a loss after two years, it will be eliminated, and Dantrell will be reassigned as an assistant divisional manager

in another division. The divisional income statement for the most recent year is as follows:

Sales $4,590,000

Less: Variable expenses 3,953,450

Contribution margin 636,550

Less: Direct fixed expenses 675,000

Divisional margin (38,450)

Less: Common fixed expenses (allocated) 200,000

Divisional profit (loss) (238,450)

Upon arriving at the division, Dantrell requested the following data on the division